Are you considering becoming involved in a horse racing partnership or syndicate, or are you already an active partner? If so, it is crucial to know how to get started properly in order to keep track of your partnership share and be prepared when you have to give an account of your records for yearly tax preparation or other purposes.
If you want the IRS to treat your horse racing activities as a business then you must conduct your dealings in a businesslike manner. To get a proper start, before entering into any partnership you should have a clear picture of both what you expect and what the syndicate is bringing to the table. A business plan can outline what you are looking for in a syndicate and what you expect to see from your investment. Some of the things that should be included in your horse racing partnership business plan are:
* Exactly how you expect to acquire the finances needed, first for the original purchase into the horse racing partnership, and then to pay the monthly outgoings.
* A time frame for the partnership, how long is the contract, 1 year, 4 years, etc.
* Manner in which the partnership horse will be purchased: by auction, out of a claiming race, or by private purchase.
* A budget projecting both potential income and expenses.
* Spell out the limits whereby the partnership will work, for instance, do you hope to race nationally or would you prefer to remain local.
* Clearly indicate what level of insurance you intend to purchase to cover your risk.
* Is there a clause in the contract so you can get out of the partnership should you choose to do so?
In addition to a business plan, you need to know how to set up your business properly and how to account for income and expense. Some things you need to do in order to get your business set up properly include:
* Find an accountant with verifiable experience in horse racing partnerships.
* Open a new checking account restricted to transactions covering your share in the horse and name it accordingly – Elizabeth Jones dba Jones Racing, LLC.
* Retain every invoice you receive, receipt of winnings, check stub you write that apply to your horse racing partnership enterprise.
* Keep an appointment book and travel log to document appointments, visits to the racing stable, phone calls, any travel, all associated mileage, etc.
With just a little forethought, it’s fairly easy to involve yourself in the “Sport of Kings” with specific prospects and arrangements, which will guide you toward selecting the horse racing partnership that’s right for you. You will also be set up to record all your tax related activities methodically. Good preparation eliminates issues and headaches, all of which will contribute to your increased enjoyment in your racehorse ownership!
Popularity: 9% [?]
